It does not include government debt.
Click to enlarge.
First the good news. We're back to the red exponential trend line that's been in place for 50 years.
Now the bad news. That exponential trend line represents a 3.3% annual growth in inflation adjusted consumer debt per person. How can anyone possibly think that is sustainable long-term?
Here's some bonus bad news. If the trend line is considered average growth then we should keep in mind how averages work. In order for an average to make sense, we must spend as much time below an average as above it. In other words, just because we made it back to the average does not necessarily imply that we're done falling.
As a side note, I started this "Illusion of Prosperity" blog right at the peak. Go figure.
See Also:
MaxedOutMama: Hah!
Source Data:
FRB: Flow of Funds Accounts
St. Louis Fed: Population
St. Louis Fed: CPI-U
Here's some more bonus bad news.
ReplyDeleteSome of us haven't increased our consumer debt at all in the last 50 years.
What would the growth in debt look like if we were excluded from the data?
One word... scarier.
Put another way, if we found that only one person had ALL of this debt then we would know for sure that we were in big trouble. That person would NOT be able to pay it.
The closer we are to that situation the worse it is for us. That's why I believe income and debt inequality matters.
That's one reason Bernanke missed the housing bubble I think. Subprime was even more subprime than the averages showed.
The closer we are to that situation the worse it is for us. That's why I believe income and debt inequality matters.
ReplyDeleteStag,
Imho, that point can't be stressed enough.
"Imho, that point can't be stressed enough."
ReplyDeleteI completely agree. It is the single most important reason I was and am bearish.
1. There are savers/investors who may think all is okay.
2. There are debtors who know all is not.
3. There are savers/investors who can see what debtors see.
Opening my snail mail out of curiosity and reading mortgage offers in 2004 intended for others put me firmly in Camp #3.
Stag,
ReplyDeleteI'm "well anchored" in (de)Base Camp # 3 also.
Buffett says that collapse is off the table. I'm not so sure. Camp # 2 is huge. I still think something big is going to have to give.
I have little faith in the Fed's policy of assisting the eCONomy to earn/grow its way out of trillions in fraudulent debt.
Speaking of base camp...
ReplyDeleteSigns You've Chosen the Wrong Mount Everest Guide
Two words: Golf Clubs.
October 26, 2010
Fed Gears Up for Stimulus
Mr. Bernanke has used the analogy of a golfer with a new putter: Unsure how it will work, he finds best strategy is to tap lightly at first and keep tapping until the golfer figures out how best to use the putter.
Like Greensham, Bernanke keeps giving Wall Street mulligans (do-overs in golf).
ReplyDeleteAs a result, we have neither stable prices (I include assets in the mix) nor stable employment.
No way can you help Main St. by helping Wall St. That much should be obvious.
mab,
ReplyDeleteWe're told that bailing out Wall Street is the only "fairway". We're all on the "hook". The "balls" on these people to "lie" and "backspin" about it though is amazing. There's not even a "whiff" of truth. Nothing seems "out of bounds".
As a saver, it seems "unplayable" and remaining in the "bunker" is therefore better than the alternatives.
Stag,
ReplyDeleteHAHAHA!
You forgot one of the most obvious though.
tranche = slice = wedge ;)
Golf has become my favorite hobby. I use puns on the course all the time.
When I have an putt that's impossible to read, I call it a James Joyce. When I pull it dead left, it's a Thurman Munson (dead Yank). I could go on and on but I don't want to torture you.
mab,
ReplyDelete"Golf has become my favorite hobby."
Charting courses has been a favorite hobby of mine in recent years. They just aren't making any more 1973 Sumersets! Buy this formerly "under water" vessel now or forever be priced out!
"I use puns on the course all the time."
Of course you do. Who doesn't? Are there courses we can take to enhance our use of puns involving courses?
I'd be looking for an entree into courses such as that, and when I say entree I mean "the act or manner of entering". To suggest that I'm looking for a "main course" into courses wouldn't even make sense.
Speaking of courses, this entire economy is on the edge of corse (or corpse) of course.
I hope the use of "corse" was not too coarse. I wouldn't want to be lacking a sense of delicacy, taste, or refinement on this blog. I've got standards to maintain. ;)